Coal industry fuming over Obama's proposed cleanup rules

The Obama administration is weighing new rules to stop bankrupt coal companies from passing on the cost of mine cleanups onto consumers. (AP Photo/Matthew Brown)

The Obama administration is weighing new rules to stop bankrupt coal companies from passing on the cost of mine cleanups onto consumers.

Even entertaining such a move has the coal industry fuming, saying it assumes coal businesses are reneging on their obligations to reclaim mining sites after they have been shutdown.

The Office of Surface Mining, Reclamation and Enforcement announced Friday it is considering approval of a petition by the environmental group WildEarth Guardians "requesting that we amend our self-bonding regulations to ensure that companies with a history of financial insolvency, and their subsidiary companies, are not allowed to self-bond coal mining operations," according to a proposed rule in the Federal Register.

"The OSM director is once again ... making irresponsible comments and decisions," Luke Popovich, head of communications for the National Mining Association, told the Washington Examiner. "He has insinuated, with no evidence, that companies are reneging on their reclamation responsibilities."

The agency is acting on the presumption that "mining is insufficiently regulated when his own agency's reports from the states show zero evidence to support his massive regulatory rewrite," Popovich said.

The self-bonding rules were put into place by Congress to ensure that the funds would be available to up mines if coal companies were to become financially distressed. The petition says that the current rules allow regulators to accept the cleanup guarantees from companies even though they are financially insolvent.

"The petition claims that current rules allow regulatory authorities to accept self-bond guarantees from subsidiary companies that are technically insolvent due to the financial status of their parent corporations, potentially shifting the financial burden for substantial mine reclamation costs to American taxpayers in the event the companies do not have the financial resources to complete their mine reclamation obligations," the notice reads.

But it's not only environmentalists that have been critical of the system. Tax advocates have been eyeing problems with the self-bonding program over the last year. The nonpartisan group Taxpayers for Common Sense says that with the increased financial strain placed on many coal companies, the strength of the law's bonding requirements is being put to the test.

"As a result of insufficient guarantees provided by self-bonding, taxpayers may be saddled with billions in new reclamation costs," the group's website says.

Democrats praised the proposal, saying they had been urging Republicans to conduct oversight on the issue for months to no avail.

Reps. Raul Grijalva of Arizona and Debbie Dingell of Michigan, the top Democrats on the House Natural Resources Committee and the committee's oversight panel, respectively, "hailed" the decision.

"Self-bonding rules are now little more than a taxpayer subsidy for failing coal companies, and we can't wait much longer for a thorough rewrite," Grijalva said. "We keep hearing from Republicans about opposing bailouts. What do you call it when taxpayers are on the hook for hundreds of millions of dollars in cleanup costs?"

Grijalva's office points out that several companies have filed for bankruptcy protection in the last nine months, including coal giant Peabody, Arch Coal and Alpha Natural Resources.

Peabody Energy declared bankruptcy last month. Grijalva's office says the company had $1.47 billion in self-bonding obligations in Wyoming, Illinois, Indiana, Colorado and New Mexico. Arch Coal, which declared in January, $485 million in self-bonded obligations for mines it operated in Wyoming.

Alpha Natural Resources had $411 million in self-bonds in Wyoming. It also had more than $244 million in West Virginia. It settled with both states for a small fraction of the total amounts, his office said.

"Today's decision is a step in the right direction," Dingell said. "Taxpayers should not be left on the hook for billions in cleanup costs when big coal companies go bust."